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Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 18th July 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD646 (-0.1%) / $695 (-0.1%) (weekly change) (-2.0% and -2.1% YTD change, respectively). The number of week traded shares was 2.2 bn and the weekly trading volume was IQD1.3 bn ($1.1 mn).

ISX Company Announcements

  • ISX will suspend trading of AL-Nukhba for General Construction (SNUC) starting Jul. 30, 2019 due to the AGM that will be held on Aug. 4, 2019 to discuss and approve 2018 annual financial results.
  • Original shares of Iraqi for Seed Production (AISP) resumed trading on Jul. 18, 2019 after discussing and approving 2018 annual financial results, increasing the capital from IQD10.50 bn to IQD13.65 bn through 30% bonus issue and deciding to distribute 20% cash dividend (IQD0.20 dividend per share, 3.1% dividend yield).
  • Mamoura Real-estate Investment (SMRI) resumed trading on Jul. 18, 2019 after discussing and approving 2018 annual financial results and deciding to distribute 5% cash dividend (IQD0.05 dividend per share, 2.8% dividend yield).
  • International Development Bank for Investment (BIDB) resumed trading on Jul. 18, 2019 after discussing and approving 2018 annual financial results.
  • Original shares of Al-Ameen Insurance (NAME) resumed trading on Jul. 16, 2019 after discussing and approving 2018 annual financial results and increasing the capital from IQD3.8 bn to IQD5.0 bn through 30.9% rights issue. The company closed the day at IQD0.37 per share, down by 27.5%.
  • Palestine Hotel (HPAL) resumed trading on Jul. 17, 2019 after discussing and approving 2017 annual financial results.
  • ISX suspended trading Bank of Baghdad (BBOB) starting on Jul. 16, 2019 due to the AGM that will be held on Jul. 20, 2019 to discuss and approve 2018 annual financial results.
  • Gulf Insurance and Reinsurance (NGIR) resumed trading on Jul. 15, 2019 due to fulfilling ISC’s request to provide 3M19 financial results.
  • ISX suspended trading of Al-Mosul for Funfairs (SMOF) starting Jul. 15, 2019 due to the AGM that would be held on Jul. 18, 2019 to discuss and approve 2018 annual financial results.
  • Credit Bank of Iraq (BROI) decided to distribute 2% cash dividend (IQD0.02 cash dividend per share, 5.1% dividend yield) in its AGM that was held on Jul. 13, 2019.

By John Lee.

Iraq’s National Investment Commission (NIC) has reportedly approved plans for a British company to develop a 4,000 acre site near Baghdad International Airport (BIAP).

According to Thomson Reuters, the NIC is negotiating with Iraqi companies to develop the remaining 16,000 acres of the land that cabinet approved for development in May.

More here.

(Source: Thomson Reuters)

By John Lee.

On Wednesday, the Lebanese President, General Michel Aoun, welcomed the Vice President of Iraq, former Iraqi Prime Minister, Dr. Iyad Allawi, with whom he discussed the bolstering of Lebanese-Iraqi relations in all areas, especially on economic matters.

Following his meeting with President Aoun, Xinhua quotes Vice President Allawi as saying:

“We have discussed with Lebanese President Michel Aoun the possibility of creating partnership between Lebanese and Iraqi businessmen and we will be following up on our agreements to make sure they are put in action very soon.”

He reportedly added that Iraq is keen to benefit from the Lebanese expertise in the banking sector.

(Source: Govt of Lebanon, Xinhua)

By John Lee.

Iraq is ready to give 190 investment projects to Iranian investors, according to a report from Iran’s Mehr News.

It attributes the statement to Iraqi industry minister Saleh Abdullah al-Jubouri (pictured), at a meeting with members of the Isfahan Chamber of Commerce on Wednesday.

He is said to have added that the private sectors of the two countries can play a significant role in strengthening bilateral economic relations.

(Source: Mehr News)

By John Lee.

The Iraqi Cabinet held its regular meeting in Baghdad on Tuesday under the chairmanship of Prime Minister, Adil Abd Al-Mahdi, at which it discussed a series of recommendations by the Ministerial Committee for Energy regarding a number of strategic projects aimed at increasing Iraq’s oil production and exporting capacities.

The Cabinet approved the proposed Iraq-Jordan oil pipeline, and the construction of offshore oil exporting facilities in Iraq’s territorial waters in the Gulf.

it also discussed a number of infrastructure and service projects and approved a proposal from the Ministry of Construction and Housing for a pedestrian bridge in the Gherai’at area in Baghdad.

The Cabinet also approved several measures to encourage Iraqi, Arab and international investment in Iraq, including further action to cut red tape and streamline procedures.

The Cabinet approved a draft law on the accession by the Republic of Iraq to the 1997 Protocol to amend the International Convention for the Prevention of Pollution from Ships (1973) as modified by the 1978 Protocol.

(Source: Govt of Iraq)

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The market took a breather, after the blistering May rally, to end the month down -0.71% as measured by the Rabee Securities RSISX USD Index (RSISUSD), and up +0.44% for the year.

The market’s average daily turnover, excluding block transactions, followed through with the recovery of last month – a promising development especially as the Eid holidays, marking the end of Ramadan, and the beginning of summer holidays took place early in June. However, turnover is still low relative to that over the five years following the market’s peak in early 2014, with June’s average at about +21% above the average of the last year (chart below).

(Source: Iraq Stock Exchange (ISX), Rabee Securities, Asia Frontier Capital)

Trading activity, in the near term, will likely continue to be in-line with that of the last two months, as the holiday season gathers steam with a summer that promises to be hotter than average. June’s daily average temperatures of 48 degrees Celsius, versus prior averages of around 40 degrees Celsius, provided a taste of things to come for the year’s hottest months, i.e. July and August. The chart below of Baghdad’s June 2019 temperatures versus recent average temperatures illustrates the extent of the expected variance between this summer’s temperatures and recent averages.

Temperature Graph, Baghdad June 2019

(Source: Accuweather)

June’s searing heat, as well as profit taking, took the shine off the rejuvenated banking sector with the Bank of Baghdad (BBOB) down -12.8% after being up +62.5% in May, while Mansour Bank (BMNS) was -4.2% versus +20.0% in May, National Bank of Iraq (BNOI) flat versus +31.0% in May, and Commercial Bank of Iraq (BCOI) +4.5% versus +10.0% in May. Expectations for the resumption of dividends by the Bank of Baghdad (BBOB), the reasons behind the stock’s stunning May rally, will be put to the test in the next two weeks at the bank’s upcoming AGM later in July. However, as indicated last month, it’s still too early in the year to judge the likelihood of the bank distributing dividends, especially given the size of its non-performing loans (NPL’s) and the potential need for more provisions.  Such caution finds support in the decision by the National Bank of Iraq (BNOI), at its June AGM, not to distribute dividends for a challenging 2018. However, in a sign of the conditions in place for the sector’s recovery, BNOI indicated the possibility of resuming dividend payments for 2019 based on its strong results for the first half of the year as well its expectations for the second half.

Lending support to these expectations for the brighter outlook for the banking sector are figures from the Ministry of Finance (MoF) for the first four months of the year. The figures show that the budget surplus for 2019 continues to grow and is currently at about USD 2.8 bln by end of April, which, based on current spending patterns and reported oil revenues, could grow to about USD 4.2 bln by the end of June. Helped by the healing effects of increasing oil revenues, this surplus is on top of surpluses of USD 1.6 bln for 2017 and USD 21.6 bln for 2018 as the chart below shows.

(Sources: Ministry of Oil, Ministry of Finance, Central Bank of Iraq, AFC)

Current spending patterns, making up the bulk of the 2019 budget spending at about 75% of the total, are steady and consistent with an expansionary budget in which this spending is up +15% over 2018. Investment spending patterns, on the other hand, show a shift in gear as the government began to implement the 2019 budget, which came into law and thus into effect in late February. However, these are from a very low base and are in-line with expectations made here over the last few months that such spending would begin as a trickle but should grow as investment spending gets underway, adding fuel to a consumer led recovery, and ultimately leading to a sustained economic recovery. This potential economic fuel comes from the 2019 budget’s non-oil investment programme at about USD 12.5 bln, which is equivalent to about a 7.5% stimulus to the estimated non-oil GDP for 2019.

The persistent signs of economic recovery, continue to be mixed as they are in this early stage, nevertheless underscore the opportunity to acquire attractive assets that have yet to discount a sustainable economic recovery. The market’s pull-back in June, on the heels of a strong recovery in May on low turnover, suggests the beginning of a consolidation phase, which, would need a significant recovery in turnover before this recovery can become sustainable and for the market to claw back some of the -65.5% decline from the peak in early 2014 to June 2019 closing levels (as measured by the Rabee Securities RSISX USD Index).

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS), and an Adjunct Assistant Professor at AUIS. He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

By John Lee.

Gulf Keystone Petroleum (GKP) has announced its intention to commence a share buyback programme, using the company’s existing cash resources to make market purchases of Gulf Keystone common shares for a maximum consideration of US$25 million, with the first stage of that programme being initiated now to purchase Gulf Keystone shares for an initial amount of US$15 million.  

The buyback programme is aligned with the company’s focus on capital allocation and will be an accretive use of funds whilst not impacting the company’s ability to continue the execution of its existing investment programme.  It will be executed in accordance with the company’s general authorities to make on market purchases which was approved by shareholders at the company’s AGM on 21 June 2019.

The company has entered into an agreement with its brokers Canaccord Genuity Limited and Peel Hunt LLP to carry out purchases of the Initial Amount under the buyback programme on its behalf on an irrevocable and non-discretionary basis.

(Source: GKP)

By John Lee.

The Iraqi government has issued a report on the implementation of its 2018-2022 programme.

The report covers the period from October 2018, when the government came to office, to April 2019, providing an overview of what has been implemented from the government programme, identifying obstacles that may impede the completion of several projects, and outlining measures to address them.

Iraqi officials say that the report, the first of its kind to be issued by an Iraqi government, is an important measure to strengthen transparency and hold the government accountable before the Iraqi people and their parliamentary representatives.

Click here to download the report (Arabic only)

(Source: Government of Iraq)

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Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 4th July 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD642 (-3.0%) / $690 (-3.0%) (weekly change) (-2.6% and -2.8% YTD change, respectively). The number of week traded shares was 51.8 bn and the weekly trading volume was IQD19.9 bn ($16.5 mn).

ISX Company Announcements

  • In accordance with the duties of the Central Bank of Iraq (CBI) provided for in its law and in order to ensure the stability of the banking sector and increase trust in it, the CBI announced the approval of the company registration department in the Ministry of Commerce to establish the Iraqi Deposit Guarantee Company. The Iraqi Deposit Guarantee Company was established with the participation of 42 banks, including 6 government banks, 21 private Iraqi banks, 15 Arab and foreign banks, the National Insurance Company and the State Pension Fund, with a capital of IQD100 bn. (CBI)
  • ISX will suspend trading of Gulf Commercial Bank (BGUC) starting Jul. 23, 2019 due to the AGM that will be held on Jul. 27, 2019 to discuss and approve 2018 annual financial results.
  • ISX will suspend trading of National Company for Tourism Investment (HNTI) starting Jul. 22, 2019 due to the AGM that will be held on Jul. 25, 2019 to discuss and approve 2018 annual financial results.
  • ISX will suspend trading of Mamoura Realestate Investment (SMRI) starting Jul. 9, 2019 due to the AGM that will be held on Jul. 17, 2019 to discuss and approve 2018 annual financial results.
  • ISX will suspend trading of Credit Bank of Iraq (BROI) starting Jul. 9, 2019 due to the AGM that will be held on Jul. 13, 2019 to discuss and approve 2018 annual financial results.
  • ISX suspended trading of Al-Ameen Insurance (NAME) on Jul. 4, 2019 due to the AGM that will be held on Jul. 9, 2019 to discuss and approve 2018 annual financial results.
  • The Light Industries (ITLI) held an AGM on Jul. 4, 2019 to discuss and approve 2014, 2015 and 2016 annual financial results. The company has been suspended since Jul. 13, 2016 for not disclosing financial results by an ISC decision.
  • National Bank of Iraq (BNOI) resumed trading on Jul. 2, 2019 after discussing and approving 2018 annual financial results.
  • Al Taif Islamic Bank for Investment & Finance (BTIB) started trading on non-regular market on Jul. 2, 2019. The opening price will be free for the first three sessions, and then will have +/-20% price change limit.

By Padraig O’Hannelly.

A major petroleum conference in London has been told that more than 200 British companies now operating in Iraq, and those numbers are increasing.

Addressing more than 300 delegates at CWC‘s Iraq Petroleum conference, British Ambassador Jonathan Wilks CMG said:

“The UK and Iraq are becoming increasingly strong business partners and education partners, and London is becoming as it once was, the second home for many Iraqis. The number of Iraqis visiting the UK is increasing, so if you hear of difficulties getting, visas this is exaggerated.”

Looking to the current climate in Iraq, Ambassador Wilks added:

I am more than glass-half-full; the positives in Iraq right now, the dynamics, the sustainability of security improvements and economic improvements are really the best we have seen for many many years.

“We now have the best [Iraqi] government that we’ve had since 2003 … This is an extremely good time to be working in Iraq.